How to Trade NVDA in 2024
Using technical analysis to find trading opportunities in this leader of industry.
If you own NVDA, congratulations on an incredible 2023 and incredible gains. Up 239% for the year and now arguably priced more reasonably than one year ago.
I think there is room for more upside in the near and long term.
You should always be watching the leaders for direction, and you could see semiconductors lead markets overall next year.
This would put NVDA right back in the spotlight again.
Taking a look at the chart and the options data, I believe we will have great opportunities to make more money in 2024 with this stock.
There are no guaranteed set ups, but using charts to put the odds in our favor is what this is about, and I like the chart for NVDA.
Quick note: If you’re interested in using Anchored VWAP, scanners based on chart patterns, and the best charting software I’ve come across. Check out TrendSpider.
I only recommend products I use and believe in and TrendSpider is hands down the best I’ve come across which is why it is currently the only product I am an affiliate for.
Closing out 2023 bumping up against $500 seems appropriate for NVDA and I like the action we saw from October through December.
After retesting 400, NVDA quickly moved up to 500 and then pulled back.
The pull back is what I liked the most because it stopped at 450 and shares started to march higher again.
Buyers stepped in at a higher price level and regained momentum to the upside. This can be a bullish sign.
That said, while you might see NVDA take off again I think it is more likely that shares continue to grind higher in a more methodical way.
I would not be surprised to see shares reject again here at 500 to start the year.
They could move all the way up to 550 in the near to intermediate term, but I think it would be a slower build as profits will be taken. Another pull back at that point would be more likely than an extended push even higher.
This type of set up is ideal for selling covered calls.
When you own 100 shares of a stock, you may have an opportunity to sell call options against those shares. This is called a covered call strategy.
The call you are selling is “covered” because if the option is exercised, you already own the shares that you are required to sell to the option owner.
These 100 shares remain locked until the option is closed or expires.
If you think we will see another rejection at $500 to start the year, you can currently sell covered calls using the $500 strike price and collect a decent premium for doing so.
The January 26th, $500 call options bring in about $1,625 per contract as of Friday’s close.
That is a premium of roughly 3.25% in just under one month while shares are dropping.
If you think we might get a pull back and want to use your shares to collect some cash, this is the way to do it.
You will miss out on any gains above $500 if NVDA does move higher in the month of January, which is why it is best to confirm the rejection before entering the trade.
That said, you are locking in 3.25% for the month by selling a covered call which is a nice way to collect cash.
Of course, we don’t all own shares of NVDA.
Tomorrow I will break down a couple of trade ideas in the semiconductor space for premium subscribers.
There are a few names I like with more affordable options contracts and if NVDA starts moving higher, these names are likely to follow.
Stay tuned for that!
And let me know if you have any questions about any of this.
Have a great weekend and happy new year!
-Nate
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.